This Thursday when we sit down to Thanksgiving dinner with our family and friends the majority of us will be thankful for surviving the Great Recession and seeing a very challenging year for the global economy come to an end. While we are cautious in our outlook for 2010, we know that the first and second quarters will show significant growth over '09, when we were still in free fall. Earlier this week, Treasury Secretary Tim Geithner appeared on Capitol Hill before a Joint Economic Committee hearing and discussed winding down the TARP program. In a "sometimes contentious" hearing he made the point that the economy is in much better shape than when the Obama administration took office in January. (NY Times 11/20/09) In spite of Representative Kevin Brady, a Texas Republican, calling on him to resign because the economy "was such a mess," Geithner held his ground that there has been significant improvement.
As we move into 2010, I would like to see President Obama and his administration focus on job creation. With the unemployment rate over 10 percent and forecast by most economists to remain there for all of next year, we will not see sustainable growth until we move toward a significantly lower unemployment rate. This will require a more open and trusting relationship with the business community and a more realistic approach to tax policy at a time when the economy remains under pressure. As we move toward the mid-term elections next November, job creation and unemployment will be the key issues.
We are starting to see signs of the private equity market coming to life in the media and business information sectors. During the first week of November, IMS Health (RX), the leader in providing "market intelligence to the pharmaceutical and healthcare industries," announced that its board had entered into a definitive agreement to be acquired by TPG and the CPP Investment Board. (IMS Press Room 11/5/2009) Goldman Sachs (GS) will provide the debt financing to take IMS private. The total value of the transaction will be $5.2B and represents a significant premium for the public shareholders.
IMS was founded in 1954 and was acquired in 1981 by Dun & Bradstreet (DNB). It was later spun out of D&B as a separate NYSE company. Several years ago, VNU, later renamed Nielsen, announced plans to take over IMS and reunite A.C. Nielsen and IMS, which had both been spun out of D&B, but the shareholders revolted over the poor performance. Management was forced out and eventually VNU was taken private by five large private equity players and now operates privately as Nielsen. This transaction when completed will represent the largest leveraged buyout of '09. (WSJ 11/06/09)
I will close with some wine tips to accompany your Turkey Dinner!
This small winery is an inspired producer of outstanding wines. The 2006 Rive Droite is a Saint-Emilion styled, limited production (only several hundred cases) wine that will complement your meal and not overwhelm it. www.blankiet.com
I just received my fall shipment of Kistler Chardonnay and Pinot Noir. The '07 Pinot Noir Sonoma Coast (RP 91-93) would be an excellent choice for Thanksgiving dinner. www.kistlervineyards.com
A more value-oriented selection would be Merryvale's '07 Pinot Noir, Carneros. This is one of my longtime favorites to visit in Napa. www.merryvale.com
Miguel Mendoza Malbec, Reserva
This 2006 Malbec is for those of you looking for something different that also provides great value. This wine retails for under $20 and can be found at Sherry-Lehmann online or at their Park Avenue retail store. www.sherry-lehmann.com
Mary Claire and I are headed to Boston to have dinner with our family and our car will be filled with the wines listed above. Happy Thanksgiving!